ELR Citation: ELR 20730
No(s). 1:93-CV-912 (W.D. Mich. Sep 29, 1994)

The court holds that a company that purchased the assets and assumed some of the liabilities of another company is not liable as a successor corporation under §107 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for response costs the federal government incurred cleaning up a landfill at which the seller disposed of hazardous substances. The court first denies the government's request for further discovery. The government never filed a motion for extension of discovery although the court set a cutoff date for several months earlier. Nor has the government complied with Fed. R. Civ. P. 56(f)'s requirement to present by affidavit the reasons for its inability to present facts essential to justify its opposition to the purchaser's motion for summary judgment. The court holds that the government's request is untimely, and deems the purchaser's summary judgment motion ripe for decision. Applying Michigan law, the court next holds that the purchaser did not expressly or impliedly assume the seller's CERCLA liability in the assumption agreement. The agreement stated that the purchaser assumed all liabilities, "whether or not matured and whether or not contingent, existing on the closing date." Because CERCLA was enacted eight months after the sale, however, CERCLA liability did not exist on the closing date. The court next assumes that the "continuity of enterprise" doctrine is viable in CERCLA successor corporation liability actions in Michigan. The court next determines that Michigan courts would not apply the "continuity of enterprise" doctrine without considering whether there were any substantial ties between the selling and purchasing corporations. The court holds that the purchaser is not liable under CERCLA as a successor corporation. The same analysis used by courts that have generally linked CERCLA successor liability to responsibility for the waste precludes a finding of successor liability. The government did not notify the purchaser or the seller of any potential liability at the landfill until eight years after the purchase, there is no evidence or allegation that the purchaser ever arranged for the disposal of substances at the landfill, and there is no allegation that the sale of assets was structured to avoid CERCLA problems. Further, the evidence does not create an issue of fact as to whether the purchaser knew about the dumping of hazardous waste at the landfill at the time of the purchase. The court finally holds that the facts are not legally sufficient to establish that the purchaser had knowledge of the potential CERCLA liability, or that it had any other ties with the seller that would justify holding it liable for the seller's liability.

Counsel for Plaintiff
Elliot M. Rockler
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendant
Louis M. Rundio Jr., Robert J. Slobig
McDermott, Will & Emery
227 W. Monroe St., Chicago IL 60606
(312) 372-2000